“Hague Convention on Choice of Court Agreements: Impact and Opportunity.”

On October 1, 2015, the Hague Convention on Choice of Court Agreements entered into force, binding each ratifying country − to date Mexico and all of the members of the European Union, except Denmark. The United States and Singapore have each signed the Convention, though neither has yet ratified it.

The purpose of the Convention is to increase the enforceability of forum selection clauses, in which parties to international commercial contracts agree that their disputes will be decided by the courts of a specific jurisdiction. While the United States has not yet ratified the Convention, the effects of the treaty nevertheless are likely to be felt by U.S. companies that participate in global commerce, especially those with assets in ratifying countries due to the advantages offered by the Convention and the dynamic and interconnected nature of modern global commerce. As a consequence of the Convention, when United States companies that participate in global commerce are negotiating with companies headquartered in ratifying countries, those companies located in ratifying nations will be more likely than before to insist on dispute resolution clauses calling for the parties to resolve their disputes in the courts of a ratifying country in order to benefit from the Convention. Although courts in the U.S. would not be bound by the parties’ choice of forum, the courts of every ratifying country would be bound by it.